The Belt and Road Initiative, Opportunities for EU-China relations
The Belt and Road initiative (BRI) figures as the most substantial and far-reaching connectivity project of our current times, and constitutes an essential pillar of China's foreign policy. The BRI aims to ameliorate the linkage and connectivity between Asia, Europe, and Africa across a road matching the ancient Silk Road. It will link China to Europe through terrestrial transport corridors spread out across Central Asia, Russia and the Middle East. As for the maritime route, it will connect the South China Sea and the Mediterranean Sea all over the Indian Ocean, Strait of Malacca and the Suez Canal. (1)
This initiative includes 65 countries and comprehends six principal corridors:
“China – Mongolia – Russia Economic Corridor
China – Central Asia – Western Asia Economic Corridor
China – Indochina Peninsula Economic Corridor
Bangladesh – China – India – Myanmar Economic Corridor
China – Pakistan Economic Corridor
Maritime Corridor “ (2)
Since the launch of the BRI in 2013 by the Chinese president Xi Jinn Ping, this initiative drew an international interest regarding the impacts it might have on the three continents and the beneficiary countries of the project. Furthermore, it raised questions on the effects it will have on China's relations with other global actors. In this paper, we shed light on the EU-China cooperation on the BRI and the different opportunities this initiative offers to the EU-China relations.
After six years of the set-in motion of this ambitious initiative, the EU and its member states have failed to come up with a unified position over the BRI. This issue has been debated in several European capitals and EU institutions, which resulted in different views and perceptions over the BRI. Brussels expressed its concerns over this initiative owing to its lack of a rule-based approach on market entry, public tenders, and ecological and social norms. Besides, The BRI has been viewed by some important EU member states (France, Germany) as a Chinese strategy intended to impose geopolitical domination and redefinition of international rules. (3) Nevertheless, other EU member states (Italy, Portugal, Greece, Poland and Hungary) view the BRI as an opportunity to enhancing connectivity and stimulating economic growth. While this debate continues among European centres of power, media and academia, Europe has already begun getting involved in the BRI in diverse ways.
China and Europe cooperate on the BRI initially through a set of bilateral agreements and memorandum of understanding that China signed with several EU countries (Portugal, Italy, Greece, Estonia, Poland, Hungary, Croatia etc.) in addition to some non-EU countries, mainly in the Balkan region. On top of that, China and some Central and Eastern European countries implemented a framework of cooperation called 16+1, which aims to foster cooperation in order to promote the belt and road-related projects in this region. (4)
Additionally, the EU and China established in 2015 an EU-China connectivity platform, which is considered to be the EU response to the BRI. This framework aims to promote connectivity through enhancing cooperation on infrastructure building and transport policies. (5) In their turn, EU financial institutions, such as the European Investment Bank and the European Bank for Reconstruction and Development, have engaged in financing some BRI projects. More importantly, 13 EU member states are among the 57 founders of the China-led Asian Infrastructure Investment Bank (AIIB).
The fourth summit of China and Central and Eastern European countries 16+1
BRI Opportunities for EU- China Relations
The EU figures as China's largest trading partner and China is the second-largest trading partner of the EU. (6) For this reason, enhancing connectivity between China and Europe by building infrastructure (railway networks, ports, airports, highways) will positively promote trade, in addition to spurring economic growth and creating a people-to-people exchange.
Trade’s Promotion and Reduction of Shipping Time and Cost
The gravity model of trade suggests that the amelioration of infrastructure and transport technology, leading to minimizing shipping and transportation cost, promotes trade and enhances transactions. This applies to the BRI, as this initiative gives birth to giant infrastructure projects linking China and Europe and more importantly decreasing the shipping time and cost. (7)
In this context, the high-speed railway running from the Chinese province Sichuan to Lodz in Poland has led to the reduction of the shipping time and cost. Now, goods from China to Lodz arrive in only 10-12 days instead of 20 -22 days via sea shipping. After their arrival in Lodz, products can attain other EU countries through EU railways and highway networks. (8)
Additionally, by the completion of the speedy sea-land path connecting Budapest with Piraeus port in Greece, Chinese goods will be able to attain Western Europe 10 days earlier. Hence, this will bolster trade flows between China and EU. This project consists of the enlargement of the high-speed railway Budapest - Belgrade in order to reach Athens and then link it with a highway to Piraeus port. (9)
Tackling Climate Change and Reducing CO2 Emissions
The BRI investment in high-speed railways and shift from sea shipping to rail freight linking Europe and China is likely to reduce the CO2 emissions, as trains are considered environment-friendly transportation means. (10) This aligns with EU and international community efforts to reduce CO2 emissions and tackle climate change.
Direct Investment and Economic Growth
The Belt and Road Initiative has led to an increase in Chinese direct investment in Europe, moving from 1 Billion US dollars in 2008 to 35 Billion US dollars in 2016. (11) BRI related investments are likely to spur Economic growth in Europe, specifically in countries severely affected by the Euro economic crisis, for instance, Greece and Portugal. It should be noted that investment directly influences economic growth, as it is a principal component of aggregates demand. (12)
For instance, the investment in Piraeus Port in Greece has led to the augmentation of containers flow, which went from 1.5 million twenty-foot equivalents units (TEUs) to 3.7 million TEUs. As a result, the Greek economy benefited from an add value of 700 million US Dollars as well as the creation of 10 000 job opportunities. (13)
Given this positive outcome, we can see the benefits of the BRI for both the EU and China. The BRI contributes to enhancing economic growth and generating jobs in EU countries, in parallel, Chinese companies benefit from the return on investment and the development of their exports to Europe.
We can assert that the BRI has offered several opportunities to the EU-China relations. The BRI shall enhance connectivity, promote trade, reduce CO2 emission and stimulate economic growth in Europe and China. The two powers are urged to deepen political dialogue and enhance cooperation on the BRI. Consequently, defining a set of standard rules in terms of transparency, governance, protection of the environment and human rights. These rules should be respected in the implementation and management of BRI projects.
Edited by Hiba Arrame